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Toronto, Canada, December 15, 2015 — Paul Babber and Associates (www.pbaltd.ca), a premier accounting and tax consultation firm in the Greater Toronto Area (GTA), is weighing in on the predicted changes to the small business tax rate and what the Trudeau government's plans will mean for Canadians.The Liberal government has pledged to revise small business tax rules and wants to ensure that their plan does not inadvertently aid wealthy citizens who set up "shell" businesses to reduce their personal income tax amounts. This is a heightened concern in light of the tax increase that will be imposed on the country's top one percent. (Source: Curry, B. “Uncertainty looms for small-business owners as Ottawa rolls our tax reforms,” The Globe and Mail web site, December 8, 2015; http://www.theglobeandmail.com/news/politics/uncertainty-looms-for-small-business-owners-as-ottawa-rolls-out-tax-reforms/article27653981/).
"The Trudeau government has already taken steps to increase taxes for Canadians with an annual income of $200,000 or more,” says Paul Babber, CEO and President of Paul Babber and Associates. "The difficult part with revising the small business tax rules is in not harming legitimate businesses when trying to address the problem."
Finance Canada has remained silent on potential courses of action that the federal government may take. Leading speculation, therefore, is a similar-in-intent measure that Quebec is undertaking. Under the Quebec plan, businesses with three or fewer employees will no longer qualify for the reduced small business tax rate and must pay a higher corporate rate.
"The Quebec measure is likely to ensure that people with shell businesses—which, after all, don't hire much—will not gain lower tax rates. However, professionals are extremely vulnerable under the rules," Babber cautions. "Professionals like lawyers, doctors, and dentists regularly work in small, independent practices that have only a handful of employees. They can easily be undeservedly captured by this rule."
While it is not yet certain what specific measures the Trudeau government will take on this matter, action is expected. Current projections have the Liberals' tax on the top one percent of earners bringing in less revenue than expected precisely because of tax avoidance or reduction measures like shell businesses. Closing loopholes and ensuring revenue is paid is a key part of the government's efforts to ensure the tax changes do not cause more problems than they solve.
About Paul Babber and Associates
Paul Babber and Associates Ltd. has been providing personal and corporate tax assistance to Richmond Hill and GTA residents for over 30 years. More information about their work in accounting, bookkeeping, tax planning, and income tax management can be found on their web site at www.pbaltd.ca.
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Name: Paul Babber
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Organization: Paul Babber & Associates Ltd.
Address: Park Place Corporate Center, 15 Wertheim Court, Suite # 611, Richmond Hill, Ontario, L4B 3H7
Phone: +905-707-7719
Website: http://pbaltd.ca/
Release ID: 99129